Google Challenges Microsoft's Workplace Dominance

A cheaper web-based alternative to Microsoft (NASDAQ:MSFT) Office unveiled by Google (NASDAQ:GOOG) this week could ultimately challenge Microsoft's dominance of the small-business workplace software market, small business technology experts say.

Google Apps Premier Edition, a bundle of on-demand Office-like applications launched on Thursday for just $50 a year per account -- compared to Office's price tag of up to $499 -- is certain to attract the immediate attention of start-ups and smaller businesses, as well as more established firms over time, they say.

"The price is right," said Evan Goldberg, founder and CTO of NetSuite. "In the long run Google Apps is going to be something that's really exciting for small businesses because, like all on-demand software, it's so easy to get started and so easy to collaborate."

This week's launch is not the first time the search-engine giant has encroached on Microsoft's enterprise application turf by rolling out free Web-based equivalents of MS Office applications.

Three years ago, Google took on Microsoft's Outlook, a workplace e-mail and calendar application, by launching Gmail and Google Calendar. Two years later it challenged Microsoft mainstays Excel and Word with Google Spreadsheets and the Web-based word processing tool Writely, which has since been renamed Google Docs.

Yet, by bundling its office productivity tools together in a Web-based package and selling it at a low price, Google has fired a shot directly across Microsoft's bow, industry-watchers say.

While many small business owners with low budgets for IT expenditures are especially likely to test-drive Google's low-cost alternative, others that have already invested heavily in a technology infrastructure will be more reluctant to switch over right away, Goldberg said.

"Small business owners, who have invested in existing technology and are using it effectively, are not going to throw it all out immediately. Entrepreneurs are always so swamped. They are not necessarily the earliest adopters," he said.

Anita Campbell, editor of Small Business Trends, an online publication, said the uptake rate will likely be gradual.

"Gmail already seems to have made some pretty significant inroads, judging from the number of people I see using it," Campbell said. "Yet, I'm not sure how quickly the other applications are going to be taken up since some of the applications aren't quite as robust in terms of features as what you can get from Microsoft today."

Currently, the Google Apps Premier package includes Google Calendar, Google Talk, Gmail for mobile devices, and Page Creator, a Website-creation wizard. It also offers 10 GB of storage for ad-free Gmail, and round-the-clock customer support. A Service Level Agreement also offers credits if Google cannot meet its guarantee of 99.9 percent uptime availability.

In addition, Google Docs & Spreadsheets, which offers unlimited document storage, allows users in different locations to collaborate on documents and spreadsheets without e-mailing them back and forth. It also keeps track of contributions and revisions by multiple users at the same time.

That collaborative nature is one of Google's major appeals for small business owners, Campbell said.

"So many of us are now working in what I call a virtual way," said Campbell. "We're working together in teams, where people are located at a distance. To have files online and be able to easily share them is a big plus."

Goldberg agrees.

"Sharing documents is built into Google Doc in a very intrinsic way," he said, adding that online collaboration is particularly important for many new businesses whose employees are geographically dispersed because the firm does not yet have office space.

"When you're starting a business, you just want to get started," he said.